The surprise downfall of Bo Xilai

In the grey world of Chinese politics, Bo Xilai was a beacon a brilliant demagogue who ruled the megalopolis of Chongqing with an iron grip and was tipped for the highest echelons of power. His sudden fall last week, seen as a victory for economic liberals, has caused "a political earthquake", says The Daily Beast. There hasn't been a purge like it for decades.

The charismatic "rock star of Chinese politics" seemed untouchable, says The Daily Telegraph. Not only was he a "princeling" (a son of a hero of the 1949 revolution), but he was possibly China's most popular politician. The trigger for his fall was "a scandal worthy of The Wire", which began when his right-hand man, police chief Wang Lijun, sought refuge at Chengdu's American consulate, claiming Bo was out to kill him. It was a perfect excuse for party leaders to strike.

To outsiders, Bo is a bundle of contradictions. "The closest thing China has to a Western politician" (trouncing even master practitioner Peter Mandelson in one trade negotiation), he sent his son to Harrow and Oxford and wooed countless American blue-chips to Chongqing. Yet he's an ideological hardliner.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

A champion of China's "red revival", he revelled in Maoist songs and slogans, touting his "Chongqing model" as a happy marriage of Communist morality, record-breaking growth, and ruthless crime-busting. The anti-mafia campaign run by Bo's "Robo-cop" Wang saw thousands arrested, including many businessmen and political rivals. Fourteen were executed after speed trials. Yet in China's increasingly unequal and angry society (see below), Bo's "Sing Red, Strike Black" campaign struck a popular nerve.

Born in 1949, the son of Communist general Bo Yibo, Bo was raised in privilege in Beijing. During the Cultural Revolution in 1966, he joined an elite Red Guard group, comprising the teenage children of high-ranking officials. They believed the "bloodline theory" that their destiny was to rule China and their methods were lethal, says the FT. Bo's own parents were among those purged: his father survived; his mother was beaten to death. Eventually arrested himself, he joined a Cultural Revolution "study group" (euphemism for prison camp) until 1972, before being consigned to a factory.

Rehabilitated when Deng Xiaoping came to power in 1978, Bo studied journalism at Peking University, becoming mayor of Dalian city, where he employed "brutal tactics". Denied promotion to the Politburo in 2007, he built his own powerbase in Chongqing. If Wang testifies to a Chongqing reign of terror, Bo may face "worse punishment than merely losing his job", says The Daily Beast. Yet that could cause a public storm. Of the problems facing China's leaders, what to do about Bo Xilai ranks among the highest.

High stakes in the world's most important election

"The most important election this year is not taking place in the US but in China," says David Pilling in the FT. Bo's fall from grace comes at a critical time as the country prepares "for a once in a decade power transition". The two top jobs are sewn up: Bo's fellow "princeling", Xi Jinping, will almost certainly become president, with Li Keqiang as prime minister.

The question is who will secure the other seven seats on China's top Politburo committee. As Tania Branigan observes in The Guardian, Bo's high-profile campaigning "was only the most visible sign of the jockeying for position" at a crucial crossroads in China's economic and political history.

The battle lines are drawn between those (including current premier Wen Jiabao) who want more liberalisation; and those like Bo demanding more egalitarianism, notes The Times. As Bo said recently: "if only a few people are rich" at the end of a decade of breakneck economic growth "then... we've failed". Wen countered with warnings that a halt to reform could result in a "historical tragedy", such as the Cultural Revolution.

Much of Bo's neo-Maoism is just "political posturing", says Andrew Leonard in The Daily Telegraph. But his vow "to close the gap between rich and poor" was cheered on by millions furious that the boom's main beneficiaries have been "party apparatchiks and spivs". They've got a point. Bloomberg reports that the 70 richest members of the National People's Congress added more to their wealth last year than the combined net worth of the American Congress. Bo, of course, hasn't done too badly either.

Given China's multiple challenges (inflation, a property bubble, huge local debts, rising social unrest), the stakes are explosively high, says Jonathan Fenby in The Daily Telegraph. The world's second largest economy urgently needs to rebalance, but has "no record of peaceful political evolution". This power struggle should worry us all.